January 25, 2013
First Circuit Dismisses as Moot Contracts Case with Constitutional Implicatons
In 2006, the U.S. Department of Health and Human Services (HHS) recieved funds under the federal Trafficking Victims Protection Act (TVPA) and contracted with the United States Conference of Catholic Bishops (the Conference) to provide services to trafficking victims. It did so after issuing a request for proposals (RFP) and receiving submissions only from the Conference and the Salvation Army, both of which are religiously affiliated.
The Conference insisted that the contract provide that neither the Conference nor any of its sub-contracts would use the TVPA funds to counsel or provide abortions or contraceptive services and prescriptions to trafficking victims. The panel that reviewed the RFP's deducted points from the Conference's submission because of that condition, but it still rated the Conference's RFP far more favorably than that of the Salvation Army.
The Conference did not provide any direct services to trafficking victims. Rather, it subcontracted with hundreds of other organizations, which provided services to over 2200 victims over a four-year period. The Conference entered into agreements with its sub-contractors prohibiting them from using TVPA for any purposes relating to contraception or abortion, but the sub-contractors were not prohibited from using their own funds for those purposes.
In 2009, the American Civil Liberties Union of Massachusetts (ACLUM) brought suit alleging that the contract violated the First Amendment's Establishment Clause. The contract expired in 2011, and HHS replaced its program run through the Conferece with a grant program in which the Conference as not involved. The District Court nonetheless granted ACLUM's motion for summary judgment in March 2012, finding that the claim was not moot because the "voluntary cessation" exception to the mootness doctrine applied.
On January 15, 2013, the First Circuit issued its opinion in American Civil Liberites Union of Massachusetts v. United States Conference of Catholic Bishops, and it reversed. It remanded the case to the Distrcit Court for an entry of an order of dismissal because the case is rendered moot by the expiration of the contract at issue. In so doing, the First Circuit noted that the voluntary cessation doctrine has no application where the cessation is unrelated to the litigation. The exception exists to deter strategic behavior in which a party ceases the challenged behavior only to avoid further litigation and may reasonably be expected to resume the behavior once the threat of litigation has subsided. There is no likelihood that a contract will be awarded to the Conference in the foreseeable future, as HHS has locked itself into three-year agreements with other organizations under its new grant program.
As long as our first lady has ba-ba-ba-bangs [relevant "analysis" starts about a minute into the video], it seems unlikely that HHS will be contracting with the Conference and that, it seems, is enough to render ACLUM's challenge moot.
January 24, 2013
When It Comes to The Hobbit, Wired.com Puts Us to Shame
Nancy Kim beat me to the punch by posting about the contract that Bilbo Baggins enters into with Thorin's crew in The Hobbit. I was so upset that she beat me to the punch on the subject matter that I docked her a month salary from her position as contributing editor on the blog.
Now we've both been shown up (and how!), by James Daily, identifed here by Wired.com as
a lawyer and co-author of The Law and Superheroes, [who] typically focuses his legal critiques on the superhero world at the Law and the Multiverse website he runs with fellow lawyer and co-author Ryan Davidson.
Apparently, Mr. Daily got his hands on a replica of the five-foot-long scroll that was used as the contracts prop in the film. He then goes through the contract provision by provision and reaches the following conclusion:
One the whole, the contract is pretty well written. There are some anachronisms, unnecessary clauses, typos, and a small number of clear drafting errors, but given the contract’s length and its role in the film (which is to say not a huge one, especially in the particulars) it’s an impressive piece of work. I congratulate prop-maker and artist Daniel Reeve on a strong piece of work.
He provides a link for those interested in purchasing their own version of the contract, for a mere $500. " If you’d like an even more accurate replica of the contract, Weta’s online store has a version with hand-made touches by Mr. Reeve."
We tip our hats to Mr. Daily.
But I have my own thoughts about the contract that Mr. Daily does not mention. First, the price term of the contract is ambiguous, since it promises Bilbo "only cash on delivery, up to and not exceeding one fourteenth of total profits (if any)," which on my reading does not really guarantee him anything. On the other hand, the dwarves do promise to pay for Bilbo's funeral expenses, if necessary, so I think under the contract terms, he's better off dead.
This ambiguity is only partially clarified with the later provision that "the company shall retain any and all Recovered Goods until such a time as a full and final reckoning can be made, from which the Total Profits can then be established. Then, and only then, will the Burglar’s fourteenth share be calculated and decided." While this provision would strengthen any potential argument Bilbo might make that he should get no less and no more than a fourteenth share, if the contract does not define "full and final reckoning," he might have to wait quite some time to get that share, perhaps beyond his own final reckoning, and then it's Frodo's problem.
In addition, to address a matter of genuine concern; i.e., one that actually plays a role in the book, the contract does not specify the manner of delivery of payment. As Bilbo points out in Chapter 18 (spoiler alert: the mission to recover Smaug's treasure was a success), "How on [Middle] earth should I have got all that treasure home without war and murder all along the way, I don't know." Mr. Daily offers a solution: since the contract does not actually entitle Bilbo to any protion of Smaug's treasure but only to the value of a 1/14 share, the Dwarves could have wired a check to Bilbo's bank in the Shire (or the Middle Earth equivalent to a wire transfer). But in the book, Bilbo waived his right to the spoils of war beyond "two small chests, one filled with silver, and the other with gold, such as one strong pony should carry."
The fact that he did so suggests that really no part of the contract mattered much in the end. And that is as it should be, since the bonds formed by those who joined Thorin's crew went well beyond those that can be reduced to any writing or even to any trilogy of films.
[JT, with hat tip to Mark Edwin Burge of the Texas Wesleyan School of Law for directing us to the Wired.com site]
When is a Contract Not a Contract?
I recently finished a book manuscript on the subject of “wrap contracts” – shrinkwraps, clickwraps, browsewraps, tapwraps, etc. These non-traditional contracts are interstitial, occupying space in and between contracts and internet law, but not neatly fitting into one alone. I'll be blogging a lot more about them in the future.
On the subject of wrap contracts, not long ago I bought a new laptop with Windows 8 pre-installed.
But that didn’t mean I didn’t have to agree to this:
What's interesting is that my old laptop, which I ordered online, came in a package like this:
Like the typical shrinkwrap, ripping the plastic bag (which was necessary to get to the laptop inside it) was deemed acceptance.
Both were examples of rolling contracts, but they came in different forms -- and neither gave me notice of any terms to come at the time of the transaction. Yet consider the hassle I would have to go through if I decided, after having received the goods and a "reasonable opportunity to read" the terms, that I didn't want to accept the terms. I would have to ship back the computer or take it back to the store, and try to explain that I was rejecting it because I disagreed with the contract terms.
Honestly, now - don't you think the retailer would just think I was nuts? Or that I had found a better deal elsewhere? (Or that I had done something sneaky, like somehow copied the software or infected the computer with a virus?) How many think I would actually get my money back if there was nothing (else) wrong with the laptop(s)?
January 23, 2013
Lawsuit Against Subway Claims that Size Matters
Two New Jersey men sued Subway this week, claiming the world's biggest fast-food chain has been shorting them by selling so-called footlong sandwiches that measure a bit less than 12 inches.
The suit, filed Tuesday in Superior Court in Mount Holly, may be the first legal filing aimed at the sandwich shops after an embarrassment went viral last week when someone posted a photo of a footlong and a ruler on the company's Facebook page to show that the sandwich was not as long as advertised.
At the time, the company issued a statement saying that the sandwich length can vary a bit when franchises do not bake to the exact corporate standards.
Stephen DeNittis, the lawyer for the plaintiffs in the New Jersey suit, said he's seeking class-action status and is also preparing to file a similar suit in Pennsylvania state court in Philadelphia.
He said he's had sandwiches from 17 shops measured — and every one came up short.
"The case is about holding companies to deliver what they've promised," he said.
Even though the alleged short of a half-inch or so of bread is relatively small, it adds up, he said. Subway has 38,000 stores around the world, nearly all owned by franchisees and its $5 footlong specials have been a mainstay of the company's ads for five years.
DeNittis said both plaintiffs — John Farley, of Evesham and Charles Noah Pendrack, of Ocean City — came to him after reading last week about the short sandwiches.
DeNittis is asking for compensatory damages for his client and a change in Subway's practices.
The Milford, Conn.-based firm should either make sure its sandwiches measure a full foot or stop advertising them as such.
He points to how McDonald's quarter-pounders are advertised as being that weight before they are cooked.
Subway did not immediately return a call to The Associated Press on Wednesday.
[Meredith R. Miller]
New in Print
James J. Gallagher, David J. Ginsberg and Keith M. Byers, En Banc Consideration of Government Contract Issues at the U.S. Court of Appeals for the Federal Circuit. 42 Pub. Cont. L.J. 107 (2012).
E. Sanderson Hoe and Mary E. Buxton, The Plain Meaning Rule in the Federal Circuit: An Update of Case Law after Coast Federal Bank, FSB v. United States. 42 Pub. Cont. L.J. 151 (2012).
Robert K. Huffman, Close Encounters: Government Contracts Law Meets Patent Law at the Federal Circuit, 42 Pub. Cont. L.J. 121 (2012).
Richard C. Johnson, Beyond Judicial Activism: Federal Circuit Decisions Legislating New Contract Requirements, 42 Pub. Cont. L.J. 69 (2012).
W. Stanfield Johnson, The Federal Circuit's Abrogation of the NAFI Doctrine: An En Banc Message with Implications for other Jurisdictional Challenges? 42 Pub. Cont. L.J. 43-67 (2012).
James J. McCullough, Michael J. Anstett and Brian M. Stanford, Observations on the Federal Circuit's Impact on Bid Protest Litigation since ADRA, 42 Pub. Cont. L.J. 91 (2012).
Stuart B. Nibley and Jade Totman, Let the Government Contract: The Sovereign Has the Right, and Good Reason, to Shed Its Sovereignty When It Contracts, 42 Pub. Cont. L.J. 1-41 (2012).
Michael L. Rustad, Richard Buckingham, Diane D'Angelo and Katherine Durlacher, An Empirical Study of Predispute Mandatory Arbitration Clauses in Social Media Terms of Service Agreements. 34 U. Ark. Little Rock L. Rev. 643 (2012).
Amy J. Schmitz, Building Bridges to Remedies for Consumers in International E-Conflicts, 34 U. Ark. Little Rock L. Rev. 779 (2012)
January 22, 2013
Another Visual Aid for Frigaliment, the Chicken Case
We here at ContractsProf Blog can't seem to get enough of the "Chicken Case," also known as Frigaliment. Many of us use this case when teaching the "ambiguous term" exception to the parol evidence rule. In the case, the seller argued that the written contract term of "chicken" meant any type and age of chicken of the specified size while the buyer argued that "chicken" meant only "roasters and fryers" of the specified size, which are younger and appreciably better than older "fowl."
Students who are only familiar with Chick-Fil-A and the packaged chicken parts in the grocery store tend not to appreciate the practical difference between the two sides' meanings. Confused students? ContractsProf bloggers to the rescue!
For a picture that says it all, see Prof. Snyder's post from 2010. For a video-based explanation of the issues in the case from none other than Hitler, see my post from last year. Prof. Miller also has offered another video-based teaching aid to use. Today, I bring you this clip, the source of which I cannot remember.
Apologies to whomever showed this clip to me first (a former student? a previous post on this blog that is not coming up in my search?).
I like this clip because you only need to take a few seconds of class time and it sticks with the students more than a 2-D picture thanks to Ms. Child's natural charm.
[Heidi R. Anderson]
An Innovative Contracts Course at UVA
There's a post of potential interest to our readers over at the Legal Sklls Prof Blog, courtesy of Scott Fruehwald.
Here's a taste:
Professor Rip Verkerke [pictured] has developed an innovative contracts course at the University of Virginia School of Law. (full story here) He received a grant "to convert a fall-semester course into a 'hybrid technology-enhanced' offering." In addition to using innovative technology in his class, he redesigned his course as a "flipped" classroom model, "in which students watch pre-recorded lectures outside of class and participate in more interactive learning inside the classroom. . ." His goal for this flipped model is "to promote deeper learning for students." The article states, "he has taken a quantum leap this year in reimagining how to teach Contracts with online tools and a new understanding of how students learn."
Scott Fruehwald adds:
This is exactly the type of class that law schools should be teaching to better prepare their students for the contemporary legal world. Problem-solving exercises force students to apply what they have learned to facts, and studies have shown that students learn more when they apply their knowledge. Small-group discussions, along with the problem-solving exercises, make the students active learners, rather than passive receptacles as the Socratic method does. Education scholarship has determined that frequent formative assessment helps students learn more and remember more. I suspect that Verkerke's nightly quizzes are especially effective. He is also developing metacognitive learning by asking metacognitive questions to his students and causing them to self-reflect. (''What aspect(s) of the materials in this module did you find most difficult or confusing?' is a metacognitive question because it forces the students to "think about their thinking.")
In sum, Professor Verkerke's Contracts class is a model of what a law school class should be. Hats off to Professor Verkerke!
The rest can be found here.
Weekly Top Tens from the Social Science Research Council
January 21, 2013
Teaching Sales 4: What Could Be Better than Nanakuli?
In theory, if you are looking for a case to illustrate the UCC's potential liberality in letting in trade usage evidence to modify a written contract, nothing could be better than Nanakuli Paving v. Shell Oil. One cannot avoid feeling gobsmacked by the Ninth Circuit's insouciance as it uses parol evidence to alter a clear, unambiguous price term. And it's fun to say "Nanakuli."
But Nanakuli is long. In order for students to understand it, they have to appreciate the idiosyncrasies of the asphaltic paving industry in Hawaii and they have to know quite a bit of detail about the the relationship between Nanakuli and Shell. If you have six credits to play with, luxuriate in Nanakuli's details, but if you are on a time budget, do I have a case for you!
Whaley and McJohn's Problems and Materials on the Sale and Lease of Goods includes Columbia Nitrogen Corp. v. Royster Co., 451 F.2d 3 (4th Cir. 1971), which is just as outré as Nanakuli but much, much shorter. The case is about a phosphate sale, most likely for the manufacture of fertilizer. Despite the image at left, there's nothing sexy about the case, other than the fact that its logical contortions (like those in Nanakuli) are reminiscent of the Kama Sutra. Still, it's a good way to hammer home the point that, under the UCC, one cannot expect the parol evidence rule to provide much protection against the introduction of course of dealing, course of performance and trade usage evidence.